<PAGE>
Exhibit 10.5
THIS WARRANT WAS ISSUED ON MARCH 30, 2004,
AND SUCH ISSUANCE WAS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE TRANSFER OF THIS WARRANT AND
THE SECURITIES OBTAINABLE UPON EXERCISE
HEREOF IS SUBJECT TO THE CONDITIONS ON
TRANSFER SPECIFIED IN THE NOTE AND EQUITY
PURCHASE AGREEMENT, DATED AS OF MARCH
30, 2004 (AS AMENDED FROM TIME TO TIME, THE
"PURCHASE AGREEMENT"), BY AND AMONG
THE ISSUER HEREOF, CORRPRO COMPANIES, INC.,
ITS U.S. AND CANADIAN SUBSIDIARIES,
AMERICAN CAPITAL FINANCIAL SERVICES, INC.,
AMERICAN CAPITAL STRATEGIES, LTD. AND
THE OTHER PURCHASERS NAMED THEREIN, AND
CORRPRO COMPANIES, INC. RESERVES THE
RIGHT TO REFUSE THE TRANSFER OF SUCH
SECURITY UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED WITH RESPECT TO SUCH TRANSFER.
UPON WRITTEN REQUEST, A COPY OF SUCH
CONDITIONS WILL BE FURNISHED BY CORRPRO
COMPANIES, INC. TO THE HOLDER HEREOF
WITHOUT CHARGE.
WARRANT
Date of Issuance: March 30, 2004
Certificate No. W-1
FOR VALUE RECEIVED, CORRPRO COMPANIES, INC., an Ohio corporation
(the
"Company"), hereby grants to AMERICAN
CAPITAL STRATEGIES, LTD., or its
registered assigns (the "Registered
Holder") the right to purchase from the
Company 3,936,967 shares (as adjusted from
time to time hereunder, the "Exercise
Shares"), of the Company's Common Stock, no
par value ("Common Stock"), at a
price per share of $0.001, but in no event
more than $100 in the aggregate (as
adjusted from time to time hereunder, the
"Exercise Price"). This Warrant is one
of, a portion of, or a successor to one or
more Warrants (collectively, the
"Warrants") originally issued by the
Company to certain investors on March 30,
2004, in connection with the purchase of
the Senior Secured Subordinated Notes
(as defined in the Purchase Agreement).
Certain capitalized terms used herein
are defined in Section 4 hereof. Certain
capitalized terms used and not defined
herein are defined in the Purchase
Agreement. The amount and kind of securities
purchasable pursuant to the rights granted
hereunder and the purchase price for
such securities are subject to adjustment
pursuant to the provisions contained
in this Warrant.
This
Warrant is subject to the following provisions:
1A. Exercise
Period. The Registered Holder may exercise, in whole
or in part (but not as to a fractional
share of Common Stock), the purchase
rights represented by this Warrant at any
time and from time to time, to and
including the date that is the seventh
(7th) anniversary of the original date of
issuance (the "Exercise Period").
(i) Exercise
Procedure. This Warrant will be deemed to
have been exercised when the Company has
received all of the following items
(the "Exercise Time"):
(a) A
completed Exercise Agreement, as described
in paragraph 1B below, executed by the
Registered Holder exercising all or part
of the purchase rights represented by this
Warrant;
(b) this
Warrant;
<PAGE>
(c) if this
Warrant is not registered in the
name of the initial Registered Holder, an
assignment or assignments in the form
set forth in Exhibit II hereto evidencing
the assignment of this Warrant to the
Registered Holder, in which case the
initial Registered Holder will have
complied with the provisions set forth in
Section 6 hereof; and
(d) payment of
an amount equal to the lesser of
the product of the Exercise Price
multiplied by the number of shares of Common
Stock being purchased upon such exercise or
$100 (the "Aggregate Exercise
Price") in the form of, at the Registered
Holder's option, (1) a check payable
to the Company, (2) a wire transfer of
funds to an account designated by the
Company, or (3) cancellation of any debt
and/or accrued but unpaid interest owed
by the Company to the Registered Holder;
provided, however, that the Registered
Holder may exercise this Warrant in whole
or in part by the surrender of this
Warrant to the Company, with a duly
executed Exercise Agreement marked to
reflect "Net Issue Exercise" and specifying
the number of shares of Common Stock
to be purchased and upon such Net Issue
Exercise, the Registered Holder shall be
entitled to pay the exercise price for
Common Stock purchased hereunder by
cancellation of shares of Common Stock to
be purchased hereunder, valued at Fair
Market Value less the Exercise Price
thereof.
(ii)
Certificates for shares of Common Stock purchased
upon exercise of this Warrant will be
delivered by the Company to the Registered
Holder within five Business Days after the
date of the Exercise Time. Unless
this Warrant has expired or all of the
purchase rights represented hereby have
been exercised, the Company will prepare a
new Warrant, substantially identical
hereto, representing the rights formerly
represented by this Warrant which have
not expired or been exercised and will,
within such five Business Days period,
deliver such new Warrant to the Person
designated for delivery in the Exercise
Agreement.
(iii) The
Common Stock issuable upon the exercise of this
Warrant will be deemed to have been issued
to the Registered Holder at the
Exercise Time, and the Registered Holder
will be deemed for all purposes to have
become the record holder of such Common
Stock at the Exercise Time.
(iv)
The issuance of certificates for shares of Common
Stock upon exercise of this Warrant will be
made without charge to the
Registered Holder for any issuance tax in
respect thereof or other cost incurred
by the Company in connection with such
exercise and the related issuance of
shares of Common Stock. Each share of
Common Stock issuable upon exercise of
this Warrant will, upon payment of the
Exercise Price therefor, be fully paid
and nonassessable and free from all liens
and charges with respect to the
issuance thereof.
(v) The
Company will not close its books against the
transfer of this Warrant or of any share of
Common Stock issued or issuable upon
the exercise of this Warrant in any manner
which interferes with the timely
exercise of this Warrant. The Company will
from time to time take all such
action as may be necessary to assure that
the par value per share of the
unissued Common Stock acquirable upon
exercise of this Warrant is at all times
equal to or less than the Exercise Price
then in effect.
(vi)
The Company shall assist and cooperate with any
Registered Holder required to make any
governmental filings or obtain any
governmental approvals prior to or in
connection with any exercise of this
Warrant (including, without limitation,
making any filings required to be made
by the Company).
(vii)
Notwithstanding any other provision hereof, if an
exercise of any portion of this Warrant is
to be made in connection with a
public offering or sale of the Company, the
exercise of any portion of this
Warrant may, at the election of the
Registered Holder hereof, be conditioned
upon the consummation of the public
offering or sale of the Company in which
case such exercise shall not be deemed to
be effective until the consummation of
such transaction.
2
<PAGE>
(viii) The
Company shall at all times reserve and keep
available out of its authorized but
unissued shares of Common Stock solely for
the purpose of issuance upon the exercise
of the Warrants, the number of shares
of Common Stock issuable upon the exercise
of all outstanding Warrants. All
shares of Common Stock that are so issuable
shall, when issued, be duly and
validly issued, fully paid and
nonassessable and free from all taxes, liens and
charges, except those that may be created
by the Registered Holder. The Company
shall use commercially reasonable efforts
to assure that all such shares of
Common Stock may be so issued without
violation of any applicable law or
governmental regulation or any requirements
of any domestic securities exchange
upon which shares of Common Stock may be
listed (except for official notice of
issuance which shall be immediately
delivered by the Company upon each such
issuance).
1B. Exercise
Agreement. Upon any exercise of this
Warrant, the Exercise Agreement will be
substantially in the form set forth in
Exhibit I hereto, except that if the shares
of Common Stock are not to be issued
in the name of the Person in whose name
this Warrant is registered, the Exercise
Agreement will also state the name of the
Person to whom the certificates for
the shares of Common Stock are to be
issued, and if the number of shares of
Common Stock to be issued does not include
all the shares of Common Stock
purchasable hereunder, it will also state
the name of the Person to whom a new
Warrant for the unexercised portion of the
rights hereunder is to be delivered.
Such Exercise Agreement will be dated the
actual date of execution thereof.
1C. Fractional
Shares. If a fractional share of Common
Stock would, but for the provisions of
paragraph 1A, be issuable upon exercise
of the rights represented by this Warrant,
the Company shall, within five (5)
Business Days after the date of the
Exercise Time, either (i) round up such
number of shares to the next highest whole
number or (ii) deliver to the
Registered Holder a check payable to the
Registered Holder in lieu of such
fractional share in an amount equal to the
difference between the Fair Market
Value of such fractional share as of the
date of the Exercise Time and the
Exercise Price of such fractional
share.
Section 2. Adjustment
of Number of Exercise Shares. In order to
prevent dilution of the rights granted
under this Warrant, the number of
Exercise Shares shall be subject to
adjustment from time to time as provided in
this Section 2.
2A. Adjustment
of Number of Exercise Shares upon Issuance
of Shares of Common Stock or Stock
Equivalents. If and whenever on or after the
actual date of issuance of this Warrant
(notwithstanding anything to the
contrary set forth in Section 7 hereof),
the Company issues or sells, or in
accordance with paragraph 2B is deemed to
have issued or sold, any shares of
Common Stock for a consideration per share
of Common Stock less than the Fair
Market Value per share of Common Stock at
the time of such issue or sale (not
including the issuance of any Outstanding
Securities), then forthwith upon such
issue or sale, the Exercise Shares will be
increased by multiplying such number
by a fraction, (A) the numerator of which
is the Fair Market Value per share of
Common Stock at the time of such issue or
sale and (B) the denominator of which
is the amount determined by dividing (a)
the sum of (1) the product derived by
multiplying the Fair Market Value per share
of Common Stock at the time of such
issue or sale times the number of shares of
Common Stock outstanding on a Fully
Diluted Basis immediately prior to such
issue or sale, plus (2) the aggregate
consideration, if any, received by the
Company upon such issue or sale, by (b)
the number of shares of Common Stock
outstanding on a Fully Diluted Basis
immediately after such issue or sale;
provided, however, that notwithstanding
any other provision of this paragraph 2A or
of paragraph 2B, no adjustment shall
be made for the issuance of Outstanding
Securities.
2B. Effect on
Exercise Shares of Certain Events. For
purposes of determining the adjusted
Exercise Shares of Common Stock under
paragraph 2A above, the following will be
applicable:
3
<PAGE>
(i) Issuance
of Stock Equivalents. If, after the actual
date of issuance of this Warrant
(notwithstanding anything to the contrary set
forth in Section 7 hereof), the Company in
any manner grants or issues Stock
Equivalents, other than as permitted by the
Purchase Agreement and other than
which are Outstanding Securities (or any
option, warrant, right or similar
security or claim exercisable into,
exchangeable for, or convertible into
Outstanding Securities), and the lowest
price per share of Common Stock for
which any one share of Common Stock of the
Company or analogous economic right
is issuable upon the exercise of any such
Stock Equivalent is less than the Fair
Market Value at the time of the granting or
issuing of such Stock Equivalent,
then such shares of Common Stock will be
deemed to have been issued and sold by
the Company for such price per share of
Common Stock. For purposes of this
paragraph, the "lowest price per share of
Common Stock for which any one share
of Common Stock or analogous economic right
is issuable" will be equal to the
sum as of the time of the grant of the
lowest amounts of consideration (if any)
received or receivable by the Company
(whether payment for the Stock Equivalent
or as payment for the exercise or
conversation of the Stock Equivalent) with
respect to any one share of Common Stock or
analogous economic right upon the
exercise of the Stock Equivalent (whether
by conversion, exchange or otherwise)
or other similar indication of the price
per share of Common Stock (such as the
floor value for stock appreciation rights).
No further adjustment of the
Exercise Shares will be made upon the
actual issue of such shares of Common
Stock or upon the exercise of any rights
under the Stock Equivalents.
(ii)
Change in Option Price or Conversion Rate. If the
purchase price provided for in any Stoc
